April Car Sales: The Bottom's Around Here Somewhere

April Car Sales: The Bottom's Around Here Somewhere

By Dale Buss, Michelle Krebs and Bill Visnic

April's auto sales numbers looked pretty much like those from March, and February, and January - abysmal. Industrywide sales plunged by 34 percent last month compared with a year earlier, continuing the first-quarter trend of dreadful comparisons tied to a moribund economy.

But in those April results, carmaker executives and analysts on Friday also thought they saw more than just the latest in a long string of awful comparisons with 2008. Almost to a person, they interpreted April's performance and other economic data as painting at least a near bottom of the dreadful U.S. car market - and as the harbinger of an eventual recovery.

"We won't truly be able to call the bottom until summer when we can look back at three consecutive months of increase in the annualized rate of sales," said Jesse Toprak, executive director of industry analysis for Edmunds.com. "We had expected April would be the start of that. And April's annualized sales rate, while lower than March, still didn't dip to February level."

The Seasonally Adjusted Annualized Rate (SAAR) came in at 9.5 million vehicles, lower than 9.8 million to 10 million Toprak and other analysts predicted, but still came in above the 9.1 million low of February. Toprak attributes the less robust end of April to the negative publicity in the lead up to Chrysler filing Chapter 11 bankruptcy on Thursday.

"We're at the bottom and poised for vehicle sales to start rising," insisted Michael DiGiovanni, General Motors' chief of U.S. industry analysis. "I can't tell you the exact month [but] the ducks are getting in a row for the industry to recover modestly in the second half of the year."

Bob Carter, vice president and general manager of the Toyota brand in the United States, spied "signs that the industry sales contraction is nearing its end."

"Industrywide," added Jim O'Donnell, president of BMW North America, "April felt more like a dust bowl than a spring garden for new car sales, but at least we are seeing improvements compared to the dark beginning of the year."

Even Chrysler executives, fresh off the company's Chapter 11 bankruptcy filing this week, professed some optimism as the company's retail sales and share were "well above expectations," according to Jim Press, vice president and chairman. "The industry appears to have stabilized," he said. "We know where the bottom is, and as the economy struggles to recover, vehicle sales should follow."

Broader Economy

The realities of April, per se, weren't encouraging. The industry sold 818,766 vehicles during the month, a 34-percent decline from 1,242,655 sold in April 2008 and amounting to the 9.5 million SAAR, continuing a string of sub-10-million-rate monthly performances.

And as Americans were faced daily with dramatic headlines out of Detroit about the fates of Chrysler and GM, showroom traffic and sales actually faded toward the end of the month rather than pick up as it usually does. "Retail sales hit the wall in the last week of April for most OEMs," DiGiovanni said.

U.S. consumers also remained held back by rising unemployment and few indications that the economy as a whole has bottomed out or will recover soon.

And yet it was indicators in the broader economy that company executives interpreted as reasons for optimism that auto sales really are in the process of bottoming out.

They pointed to the fact that consumer spending grew in the first quarter even though the general economy contracted at a rate of more than 6 percent, extending the most serious decline since the Eisenhower administration. They noted a rise in personal income and a late-April jump in consumer confidence.

And the executives noted the likely increasingly stimulative effect of low gasoline prices, lower mortgage rates and income-tax refunds. A new study by R.L. Polk & Co. said that 55 percent of U.S. consumers plan to buy their next vehicles within two years.

One more thing, too: the strong possibility that the Obama administration will institute some kind of scrappage incentive to get Americans to give up their clunkers and buy new vehicles, a move Edmunds' Toprak forecasts could add 500,000 sales or more to this year's tally. Similar new programs already have goosed sales in China, Germany and Brazil.

General Motors: Core Brands Rising

GM reported 173,007 sales in April, down nearly 34 percent compared with 2008.

But executives were happy to note that April sales were 11 percent higher than March even though, in typical seasons past, auto sales have dropped from March to April. That increase was bigger than for Ford, Toyota, Nissan or Chrysler noted Jessica Caldwell, industry analyst for Edmunds.com.

In the month, GM also notched its highest market share since December, at 20.6 percent of the overall market, a number that was 2.5 percent higher than March.

Those statistics comprise just one bit of evidence, they believe, that the fortunes not only of GM but also of the entire U.S. auto industry are nearing a change for the better.

"We think this all begins to come together for us when we get some clear air late this summer," said Mark LaNeve, GM's North American sales and marketing chief. GM already announced plans to shutter many of its North American assembly plants for as long as nine weeks this summer.

Clearly, GM continued to fight all sorts of extraordinary negatives for all of April. There was its continuing struggle with the Obama administration, unions and bondholders over whether the corporation would be able to avoid a bankruptcy filing by the end of May.

And in particular, the company's soon-to-be-orphaned brands - Hummer, Saturn and Saab - got socked. "We continue to suffer with the brands that are up for sale" and otherwise indisposed, LaNeve said. In April, he added, GM also "had to fight off erroneous rumors that we were discontinuing the Buick and GMC brands."

On the other hand, sales of the four "core" brands that GM has committed to keeping - Cadillac and Chevrolet, in addition to Buick and GMC - were up by 10 percent from March to April and garnered at least an extra percentage point of share for GM, LaNeve said.

Sales of Chevrolet trucks and crossover were up 22 percent; cars, led by Cobalt, Impala and Corvette, were up 21 percent. Chevrolet models seeing double-digit increases were Silverado, Tahoe, Traverse and HHR. 

Cadillac trucks and crossovers were down 11 percent, but STS and DTS sales pushed Cadillac car volume up 7 percent.

GMC trucks and crossovers increased 7 percent with Sierra and Yukon leading the way.

The Buick Enclave saw a 17-percent increase in sales, while a double-digit increase in Lucerne sales pushed cars up 25 percent.

In April, GM also began moving back up toward traditional levels of fleet sales after basically sitting them out the first quarter. As long as fleet deals are profitable, they're essential to the business.

Ford: Forging Ahead - Sort Of

Ford Motor Co. sales executives tried to accentuate the positive for April - continuing improvements in market share - but otherwise found it difficult to disguise a 31.6-percent overall decline compared with April 2008.

Ford's dip nonetheless was one of the industry's stronger performances; among the domestic Big Three and Japan's three largest automakers, Ford was bettered only by Honda Motor Co. Ltd.'s 25-percent slide. April was Ford's best sales month of 2009.

Calling it "another solid month of progress for Ford," the company's Ford division recorded an 8.3-percent gain over March sales, according to data from Edmunds.com. It also was the Ford unit's best sales month since last August.

Ford was bolstered by outsized sales (18,321) of its Fusion midsize sedan, which is redesigned for 2010 and added a high-mileage hybrid variant. Ford chief sales analyst George Pipas did admit, however, that 80 percent of the month's total - a jump of 21.7 percent compared with last April - was accounted for by runout sales of the previous-generation Fusion and "a lot of things came together" in what was Fusion's best sales month since its launch in October 2005, according to Edmunds.com.

The only other Ford-affiliated model to post an April sales increase was the Volvo C30, which posted a thin 1.5-percent gain to 342 units. The Volvo brand as a whole was down 36.7 percent in April and is down an alarming 46.4 percent for the year, on a pace to barely clear 50,000 units this year.

Ford's traditional SUVs and fullsize pickups continued to take a pounding. April saw declines of 72.1 percent for the Expedition and 49.4 percent for the Explorer, while the F-Series pickup line dropped a substantial 35.8 percent and has slid 42.8 percent for the year. The F-Series already is down some 82,000 units compared with 2008, which itself was a mediocre year in terms of F-Series volume.

Pipas said F-Series' retail performance was down just 25 percent for the month, however - adding that sales in the fullsize pickup segment have sagged drastically since the fourth quarter of last year.

Ford's Lincoln premium brand was down 42.2 percent in April, to a total of just 5,973 units. Its individual models all performed dismally, led by a drop of 78.4 percent for the Navigator and 42.5 percent for the MKX crossover. The surprise of the month was that somewhere in the nation, 361 Navigators were matched with buyers.

It was much the same for the Mercury unit: overall April sales declined 40.7 percent, paced by a 57.2-percent plunge for the Mountaineer and a 40.4-percent drop for the Milan, which like the Fusion is redesigned for 2010.

Ford executives were careful to note that the company's gains came as it slightly reduced incentive spending, a trend counter to the rest of the industry. Pipas said Ford also reduced inventories in April and is down to about 78 days' supply overall, a reduction from its mid-80s days' supply in March.

Chrysler: Showrooms Were Busy

Chrysler executives claim sales on the last day of the month may actually have been boosted by its filing for Chapter 11 bankruptcy - more specifically, by President Obama's admonition that bankruptcy should not keep buyers from Chrysler showrooms, not to mention his additional encouragement for Americans to purchase American cars.

Chrysler sales chief Steve Landry said the company closed thousands of deals nationwide even after the announcement of the company's bankruptcy, but the flurry didn't do much to change the numbers: Chrysler sales dropped 48 percent compared with April 2008 and many individual models showed precipitous plunges.

The Jeep division delivered Chrysler's best results for the month, dropping a relatively modest 17 percent and presenting the company's only model to gain ground: sales for the Wrangler line were up 7 percent (and remain up 14 percent year-to-date). But Jeep's other models were pounded: Grand Cherokee slid 45 percent, Liberty 50 percent, Patriot 69 percent and Compass 75 percent to just 712 units.

But seeming to support the notion that accelerating talk of the company's looming bankruptcy may indeed have spooked everyday buyers, many of Chrysler's mainstream models posted giant sales declines in April.

The Sebring dropped 75 percent and its Dodge Avenger counterpart plunged 76 percent. The Caliber compact car was off 71 percent and the Chrysler 300 fullsize sedan declined by 49 percent. Chrysler's minivans continued downward, too, with the Caravan sliding a worrying 54 percent and the Town & Country off 31 percent. The one comparative bright spot was the new-ish Journey crossover's decline of 33 percent.

Chrysler's trucks and SUVs fared only slightly better: the Ram fullsize pickup, said to be gaining market share, nontheless dropped 26 percent and is off 31 percent for the year. The Dakota midsize pickup slid 66 percent - to just 878 units. And the Durango SUV sold just 331 units in the entire month, a decline of 87 percent.

Chrysler already was posting some of the highest incentives in the industry, and executives said the company will launch a new menu of spiffs on May 5. The new incentives include customer cash and factory-to-dealer money, as well as an "aggressive loyalty campaign," said Landry.

In addition, new-vehicle financing will shift to GMAC Financial Services, with rates available sometime near mid-May. Landy said the switch to GMAC also will once again enable in-house leasing contracts - although the terms likely won't be very favorable.

Toyota: Seeking Normal

Toyota Motor Sales USA reported sales of 126,540 vehicles in April, down nearly 42 percent from last April and among the industry's worst performances for the month.

Clearly, the company continues to struggle with the troubles inherent in a generally beaten-down U.S. auto market even though the global sales leader doesn't have the capital scarcity or reputation problems of GM and Chrysler.

"What's challenging in the market continues to be consumer confidence," Carter said. "We believe our products will perform at share of industry" over the long run, he said.

It isn't helpful to Toyota that, as President Obama works to save Chrysler and GM as going concerns, he's been urging the populace to "buy American."

"The president's comments were troubling," said Irv Miller, Toyota's PR chief. He should be considering "stimulating the entire auto industry" in this country. Miller noted: "The [Toyota] Camry is built in Kentucky, and the Ford Fusion is built in Mexico.":

Meanwhile, one of Toyota's focuses is "right-sizing inventories," Carter said. From a recent peak of 300,000 units in storage at the end of the year, the company has been able to pare inventories to about 220,000, giving Toyota overall a comfortable 58-day supply.

And with Toyota dealers kicking off this month the first of three planned national sales events during the year, called "Perfect Timing," Carter is confident that Toyota has seen its worst days.

In fact, the company has begun adding to production schedules recently for its Toyota Camry compact sedan and Toyota RAV 4 compact SUV "in anticipation of mid-term needs," Carter said. He declined to reveal by how much. April also saw the best-ever sales for the recently introduced Venza. Conversely, sales of the once-popular Prius hybrid, being supported by the highest incentives in history, according to Edmunds.com, tumbled dramatically.

Lexus-division sales continued to disappoint in April, but Mark Templin, group vice president and general manager of the brand, also pointed to "some encouraging signs."

He noted a strong launch for the new RX SUV, with more than 6,000 sales during the month, making it "the top-selling vehicle in the luxury industry." Lexus will be introducing an IS convertible version at the end of this month, which will help, and a new hybrid version of the RX in June.

Honda: Ready to Accelerate?

Yes, a 25.3-percent decline in monthly sales is no victory. But Honda Motor Co. Ltd. put up the best performance of the industry's Big Six players, and executives have let slip in various ways that they're thinking U.S. sales will begin to improve.

Honda President Takeo Fukui said last week, "the U.S. market has shown signs of having bottomed out since the start of April." And Honda's sales performance seems to support some of that thinking. Consider these items generated by data analysts at Edmunds.com:

- Honda's Accord outsold the Toyota Camry in April by a solid 4,000 units, despite Toyota outspending Honda on incentives.

- Civic Hybrid sales were revived; the fuel-efficient model posted its best month since last July.

- Despite just moving into showrooms, Honda sold 2,096 copies of its new Insight hybrid in April.

Some of Honda's comparative success, however, was attributable to the company's highest-ever incentives, said Edmunds.com analysts. The $1,439 per vehicle Honda laid on the hood is uncharacteristic, but at least delivered results, unlike some other companies that are piling on the cash but still losing sales and market share.

But it's far from rosy just yet for Honda. The once-surging Fit subcompact slipped a heady 30.7 percent in April and remains down 13.9 percent for the year. And the big players, Accord and Civic, posted declines of 15.6 and 23.2 percent respectively.

Honda's trucks continue to struggle, too: Ridgeline dropped a foreboding 71.5 percent and is down 65.2 percent for the year; just 4,703 units were shifted in the first four months. Element was down 65.6 percent and even the usually strong CR-V slid 33.7 percent in April and is down a troubling 25.9 percent for the year.

There were no winners at Honda's upscale Acura unit, either, despite a relative newness for many model lines. The flagship RL moved a scanty 202 units - a 64-percent plunge - and April saw a hefty 55.7-percent decline for the RDX compact crossover, also posting a low 740 sales. The TSX was the division's best performer, dropping just 6.6 percent, but Acura's total sales declined 32.3 percent in April.

Perhaps most worrying for Honda, the company's total sales are lagging last year's first four months' sales by more than 150,000 units, a 31.3 percent slowdown. By this time last year, Honda was approaching a half-million vehicle sales (487,822) in the U.S. The number this year stands at 332,014.

Nissan: Bested by Hyundai Group

Nissan North America repoted April sales of 47,190 units, down nearly 38 percent from a year ago and also representing a plunge of more than 29 percent in sales from March - when other Big Six OEMs were reporting more favorable comparisons with the previous month.

In fact, Nissan's performance in April allowed Hyundai to eke past it among the top-six largest-selling OEMs in the American market in the month.

Nissan also posted a Total Cost of Incentives, calculated according to a proprietary formula by Edmunds.com, of $2,779 for April, an all-time high for the company. "Yet its record incentive spending didn't convert to healthy sales," noted Caldwell of Edmunds.com.

The bad news was spread between Nissan brand the luxury Infiniti marque, with Nissan sales down by more than 36 percent in April compared with a year earlier, and Inifiniti results sliding by more than 48 percent.

Hyundai: Record Genesis Month

Hyundai sold 33,952 vehicles in April, a 14-percent decline from April 2008.

"We had strong sales of our Accent and Alabama-built Sonata, up 26 and 7 percent, respectively, and the best sales month yet for Genesis," said Dave Zuchowski, Hyundai Motor America vice president of national sales. "Most importantly, we've delivered a 20 percent increase in retail market share. Hyundai outperformed every brand in retail market share increase in the first quarter, and that strong retail performance continues into our traditionally strong spring/summer selling season."

Indeed, the Genesis, now available as a coupe as well as a sedan, kicked in sales of 2,076 for the month. In addition to higher Accent and Sonata sales, Tiburon sales soared to 3,353 vehicles sold from only 894 a year ago. Veracruz minivan sales were up a tad.

Elantra (-53 percent), Santa Fe (-48 percent) and Azera (-90 percent) had huge declines.

Kia: The Soul Story

Kia sold 25,606 vehicles in April, down 15 percent from 30,066 sold in April 2008.

The brand-new Soul was Kia's soul bright spot as sales of virtually every other model in the line were down. Kia sold 3,228 units of the Soul, which just went on sale in February. In total, Kia has sold 4,508 Souls so far.

"Soul's strong early performance is a clear indication that its eye-catching design and wide array of personalization options is resonating with consumers and bringing new buyers into our showrooms," said Michael Sprague, Kia's vice president of marketing. "Style-driven vehicles such as the Soul and upcoming Forte sedan and Forte Koup mark a turning point for the Kia brand, allowing buyers to make an emotional connection with our vehicles."

The Forte compact sedan goes on sale in summer, followed closely by its sibling, the Koup, which was unveiled at last month's New York International Auto Show.

Other than the Soul, however, almost every model in Kia's line saw a sales decline. The Borrego chipped in an extra 498 sales and sales of the Amanti climbed to 671 units from 235 a year ago.

BMW: Seeing Improvement

The BMW Group sold 19,362 BMW and Mini branded cars in April, a decline of 38.4 percent from the 31,448 vehicles it sold in April 2008.

"Industrywide, April felt more like a dust bowl than a spring garden for new car sales, but at least we are seeing improvements compared to the dark beginning of the year," said Jim O'Donnell, president of BMW North America.

Sales of BMW brand vehicles fell 41.3 percent to 15,705 vehicles from the 26,735 vehicle sold a year ago.

Of BMW-branded cars, the 1-Series and the 5-Series showed the smallest declines - in the single digits. Sales of the Z4 roadster, which will soon be replaced with a new model, dropped a stunning 97.7 percent. BMW's bread-and-butter 3-Series had sales 47.3 percent lower than a year ago. Sales of the flagship 7-Series, the new version of which is in launch mode, fell 50.3 percent.

As for BMW's SUVs, sales were off in total 50 percent with the a scant 392 X3 models sold for a 77.9-percent decline. Sales of the X5 and X6 were down more than 35 percent each.

Mini sales in total dropped 22.4 percent to 3,657 vehicles, from 4,713 a year ago. The Cooper and Cooper S Convertible, the smallest-volume model in the Mini line, showed the smallest sales decline of 2.8 percent. Cooper sales dropped 27.5 percent; Clubman sales were off 19.4 percent.

Daimler: Sales of Smart Cars Down Nearly 50 percent

Daimler sold 15,910 Mercedes-Benz and smart branded vehicles in April, a decline of 30.7 percent.

Mercedes sold 14,565 vehicles, down 28.1 percent from 20,271 a year ago. Mercedes said the C-Class (4,274 sales), the heavily-promoted and incentivized GLK (1,869 sales) and M-Class (1,838) were its volume leaders.

Sales of smart cars, which arrived in the U.S. market in January 2008, fell 49.9 percent to 1,345 vehicles, from 2,683 in April 2008.

Porsche: Cayman Clobbered

Porsche sold 1,853 vehicles, a 35.3-percent decline from April 2008's 2,863 vehicles.

Sales of the Boxster and Cayman got clobbered, with sales of those combined models down 59.4 percent, indicating the lower luxury segment is hurt worse than the upper end. Indeed, sales of the 911 models dropped 25.9 percent and sales of the Cayenne SUV fell 27.3 percent.

Jaguar Land Rover: Luxury Market Stabilizing

Jaguar Land Rover North America sold 3,324 vehicles in April, a decrease of 23 percent from the 4,342 sold in April 2008.

Land Rover sold 2,557 vehicles, down 20 percent from 2,043 a year ago. Sales of Land Rover's newest model, the LR2, rose 9 percent and Range Rover Sport sales eked out a 1-percent increase from April 2008 with 958 units sold last month.

Jaguar sold 1,785 vehicles, down 28 percent from 1,785 a year ago but its best month for sales since August 2008. Jaguar's volume model, the XF sedan, had a sales increase of 12 percent for its best month since August last year; it was launched in March 2008. Sales of the XK Coupe and Convertible edged up 2 percent from a year ago.

"April sales for both the Jaguar and Land Rover brands in the United States show signs that the U.S. luxury market has stabilized, allowing us to exceed our internal objectives for the month," said Gary Temple, company president. 

"On the Jaguar side, we achieved our best sales month since last August helped by the growing awareness of Jaguar's industry-leading dependability," Temple added. "On the Land Rover side, we had a very solid month driven by the LR2 and Range Rover Sport, which both continue to gain market momentum."

Mitsubishi: 56-Percent Plummet

Mitsubishi sold 3,919 in April, a 55.9-percent decline from 8,878 vehicles sold a year ago.

Mitsubishi Motors North America President and CEO Shin Kurihara commented that as the entire auto industry declined in April, the automaker is looking for ways to improve.

There are signs the market is beginning to stabilize," said Kurihara."Our hard work during the global downturn provides us with a platform for success as the economy improves."

He noted that Mitsubishi will introduce the Lancer Sportback this summer and will launch it with "an attention-getting new advertising campaign." He also said tremendous interest exists for Mitsubishi's upcoming all-electric i MiEV.

Suzuki: Continued Crash

Suzuki sold a scant 2,543 vehicles in April, almost three-quarters less than it sold in April a year ago, when the company's total was 9,669 units.

Suzuki's biggest selling vehicle was the SX4 at only 1,033 sold, a 64-percent decline form a year ago. Suzuki also continued to be hurt by the waning popularity of SUVs, with sales of the Grand Vitara down 39 percent. The brand sold only 225 XL7 models, a 93-percent drop from 3,082 sold a year ago.

The new Equator, a pickup truck based on the Nissan Frontier, kicked in 202 sales.

Analysis provided by Jessica Caldwell, Edmunds.com's director of pricing and industry analysis.

Photos by Manufacturers

1 - Chevrolet Traverse

2 - Ford Fusion

3 - Jeep Wrangler

4 - Toyota Venza

5 - Honda Accord

6 - Nissan Maxima

7 - Hyundai Genesis

8 - Kia Soul

9 - BMW 3 Series

10 - smart fortwo

11 - Land Rover LR2

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.